Healthcare: Town, retirees could save big

Friday

Mar 21, 2014 at 12:01 AM

The town of Cohasset and its retirees could experience relief in health insurance costs. Officials are considering whether to move to a Medicare prescriptive drug plan (PDP). The Board of Selectmen plans to take a vote during the Tuesday, March 25 meeting.

Staff Reporter

Officials are sharpening pencils in an effort to save money on healthcare.

The town of Cohasset and its retirees could experience relief in health insurance costs. Officials are considering whether to move to a Medicare prescriptive drug plan (PDP). The Board of Selectmen plans to take a vote during the Tuesday, March 25 meeting.

Representatives from the Massachusetts Interlocal Insurance Association (MIAA) explained how the savings would work during the Tuesday, March 18 selectmen meeting.

Jill Gallant, MIAA senior account executive said that the proposed changes will only apply to the prescription drug portion of the benefits. Otherwise, “the benefits have no change whatsoever for the medical portion.”

This means that retirees will be able to keep their current doctors, said Gallant, adding that the costs savings is “partially due” to the federal government’s Affordable Care Act.

Cohasset currently has 75 retirees enrolled in the Managed Blue plan, according to Gallant.

The prospective changes would occur starting on July 1, 2014 and include decreased rates overall. Under the town’s current Managed Blue Medicare plan for seniors, retirees pay $351.49 monthly for coverage; on the new PDP, that amount shrinks to $237.76.

The retiree’s monthly premium would drop from $175.75 to $118.88; annually, it drops from $2,108.94 to $1,426.56, a savings of $682.38 per year.

The town is expected to save $102,357 annually on premium costs.

While the premiums go down, the cost for prescription drugs does go up, depending on the script. The new PDP involves fixed costs for retail prescriptions, rather than having Medicare cover a percentage of the costs.

Gallant explained the logic behind the switch.

“Retail costs differ from pharmacy to pharmacy – it’s difficult for retirees to plan and budget. A fixed dollar amount makes it easier for planning.”

Joe Callahan, MIAA marketing manager, said that MIAA will be on hand to guide retirees through the changes. “This is a product we’ve implemented in many communities,” said Callahan. “We have a full team between MIAA and Blue Cross that will meet with retirees and walk them through the process... We prepare them and give them plenty of notice and time, and make sure nobody leaves confused.”

Callahan encourages retirees to send family members if they cannot attend a future information session. “We will sit with them and look at the cost analysis for them.”

Officials said that the savings seemed too good to be true.

Town Manager Chris Senior said when he first saw the savings, “I was skeptical – what’s the catch?”

The only issue seems to be that a few prescriptions may not be covered by the new PDP. Senior said the he only noticed two, and they were vitamins that could alternatively be purchased over the counter. “Others were all covered. [MIAA] looked at every drug every single one of our retirees used.”

Senior said he is “comfortable” with the prospective changes. “Retirees save dramatically… It’s one of those rare moments where everybody wins: the town, taxpayers and the retirees.”

OPEB

Making the switch will also help the town tackle its $37 million-plus unfunded Other Post-Employment Benefits liability for retiree medical benefits, a number that only increases each year.

“One of the charges you’ve given me is to implement an OPEB plan and get savings,” said Senior. “This lays the groundwork.”

Gallant said that the potential savings is “the best case scenario I’ve ever seen.”

Senior agreed. “This is a victory all the way around.”

Selectmen seemed to remain cautiously optimistic.

“There’s really no change in the plans or the doctors, there’s very little disruption to the retirees, and the town and retirees save money. It does seem too good to be true,” said selectman Karen Quigley.